It’s honestly pretty silly to expect to track down thieves because they stole something with a tracking device in it. Are you really going to chase a thief and confront them? Do you really think the police are going to do it for you?

Yeah the police do exactly that.

When my father’s Android was stolen we called the cops and they told us to the park a block away from the thief’s house (last ping from Find My Device) and wait for them. They took a report from us, confronted the thief at his house, and got the phone back. The thief claimed that he found it at the post office and intended to return it, but the phone was in airplane mode (accessible from the lock screen) so that was clearly never gonna happen. This was in San Jose.

It is entirely reasonable to expect the police to recover stolen high value items whose location is known. Particuarly if the items were obtained with violence or weapons.

Were AirTags ever marketed as theft recovery devices? Or only as a lost and found system?

For the user, there's little difference.